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US 10-year yields test new highs as oil weighs on duration demand
Societe Generale expects the next US 10-year range to reach 5.24% to 5.36%, with relief potentially tied to month or quarter-end rebalancing and upcoming PCE and Eurozone CPI data.
Societe Generale’s Kenneth Broux said a difficult week for global bonds is being driven by rising oil prices, which has deterred duration buying. According to FXStreet’s reporting on the note, US Treasuries and Bunds have repeatedly broken into higher yield ranges.
The outlook cited for the next US 10-year level is 5.24% to 5.36%, while Bund yields are projected at 3.70% to 3.74%. FXStreet also linked the move in yields to inflation concerns from higher oil and rising expectations for an October Fed rate hike.
Broux added that any potential relief may depend on month or quarter-end rebalancing and on upcoming data, including US PCE and Eurozone CPI. FXStreet’s wrap also pointed to additional risk sentiment tied to the US-Iran standoff supporting the US dollar.